14 December, 2020
It is common practice for a commercial lease break clause to require that the tenant gives vacant possession. This usually means the tenant must remove their belongings/equipment and return the property to the landlord in the condition that it was let. But what happens if a tenant takes the phrase "vacant possession" too far?
In this case, the tenant wished to exercise the break clause in the lease. The clause required the tenant to give vacant possession of the premises. The premises were defined as including the original building on the property and landlord's fixtures (whenever fixed) and all additions and improvements.
In preparing to vacate, the tenant removed features of the property including lighting, heating and ceiling tiles. Unfortunately, there was a dispute regarding the tenants outstanding liabilities and the tenant paused the replacement of these features, allegedly pending conclusion of the dispute, however they failed to complete these works prior to moving out.
Clearly the tenant had left with vacant possession - they had taken everything! But, was this really what was intended by the phrase vacant possession?
The Courts held it was not. Whilst case law had dealt with scenarios where the tenants had left something behind (the possession was not vacant), in this rare instance, the tenant had taken everything. In doing so, the Court found that the tenant had left the property in a "dysfunctional" state that could not be occupied. Therefore, the tenant had not complied with their obligations under the lease.
The exercise of break clauses is a complicated business that not only comes down to the specific wording of the lease, but also, the practical implications of the condition of the property. For peace of mind, contact out Property Litigation team who can help you through the process.
For more information contact Samantha Abdoollah in our Dispute Resolution department via email or phone on 01254222456. Alternatively send any question through to Forbes Solicitors via our online Contact Form.